Pakistan in 2019: Recommendations for navigating change

To mark the New Year, we asked a group of senior and emerging thought leaders and policy practitioners to list the eleven top areas likely to fill Pakistan’s policy radar in 2019.

The New Year promises unprecedented opportunities for progress and peace for Pakistan and the broader region. Geo-economics is a potent new trend line expanding our horizons for mutually beneficial cooperation for development and prosperity. The overarching theme is connectivity and equal-footed partnerships forged and propelled by the Belt and Road Initiative (BRI). Pakistan must align fully to the thinking and requirements of a new age of connectivity. It is important to discard old-school notions of geopolitical insecurity. Eurasian economic integration offers a potential model for shared growth and prosperity; as such, it would be a mistake to view BRI and the China Pakistan Economic Corridor (CPEC) only as political tools of geo-strategy. This year, a framework for a new regional order may well be in reach. There are early signs of a potential settlement in Afghanistan in 2019. The decision to bring Afghanistan into the CPEC fold will be of significant consequence. A ‘CPEC Plus’ vision means taking it forward in all directions. Pakistan’s offer to normalise trade with India and revive SAARC is a potential subset of the new thinking. Accordingly, CPEC’s extension to Iran, the Gulf, broader Middle East and Africa should figure prominently in our global thinking. Challenges, of course, remain. Globally, the strategic picture is uncertain. The US is inclined to view China and Russia as strategic competitors — an erroneous read by my reckoning. The global economy may stumble as a result of strained great power relations. General elections in India may also trigger domestic and regional convulsions. This said, a clear-sighted view of the road ahead based on enlightened ideals must guide Pakistan’s thoughts and actions at home and abroad. The writer is a former Foreign Secretary.

Questions about who is Pakistani and how Pakistani they are in terms of the rights and resources they can access will be central concerns in 2019. The PTI government’s promise to consider citizenship for 1.5 million Afghans born in Pakistan, ongoing efforts to fence off the border with Afghanistan to control migrant and militant flows, and continuing controversies around FATA’s merger with Khyber Pakhtunkhwa all raise fundamental questions about Pakistani citizenship that must be addressed over the coming months. The government’s policy on Afghan refugees, still being drafted, will have to balance humanitarian concerns with the hard realities of domestic politics. Granting citizenship to Afghans is likely to be opposed in Sindh and Balochistan for fear of implications for ethno-political dynamics in heterogeneous capitals such as Karachi and Quetta. This issue is also likely to be hijacked by foreign and security policy considerations: citizenship for Afghans cannot be a purely internal matter at a time when momentum toward a political reconciliation with the Afghan Taliban is building, and the extent of Pakistan’s role in that process remains a question. FATA’s legislative limbo, no longer governed by the Frontier Crimes Regulation, and with successful legal challenges against the FATA Interim Governance Regulation, also raises urgent questions about the rights of the former tribal areas’ residents, ones that this government will struggle to answer as they too fall in the cross-hairs of security and foreign policy. These headline-making issues aside, internal migration will continue to be a key challenge for Pakistan in 2019, and beyond. Pakistan is urbanising at 3 per cent per year, the fastest rate in South Asia. This is touted as a sign of growth and development, but is also the consequence of climate change, unemployment and social splintering. Internal migration has implications for democracy, service delivery and resource allocation, and will continue to stress our cities, creating further opportunities for ethno-political, sectarian and other forms of conflict. Finally, in 2019 Pakistan must introspect about the limits of its citizenship. India is currently revisiting its Citizenship Act to make it easier for non-Muslim minorities from Pakistan, Afghanistan and Bangladesh to avail Indian citizenship. Pakistan must seek to revive an inclusive and rights-oriented approach to citizenship and migration. The writer is a columnist at DAWN.

Our economy is facing a serious balance of payments crisis. Thus far, the government’s approach has been to attempt financial austerity and to obtain short-term liquidity through bilateral agreements. The austerity drive consists of reducing government spending and increasing tax revenues. On the spending side, the drive has been characterised by populist measures such as reduction in VIP expenditures that add little to the bottom line and regressive measures such as cuts in development spending that affect critical outcomes for the most vulnerable. Meaningful decreases in spending are perhaps infeasible due to ballooning debt costs and accelerated military spending. What steps must be taken in 2019? On the taxation side, serious gains are possible if the government gives up the current arbitrariness and unstructured nature of its interventions. Currently, the taxation interventions are focused on (i) raising direct taxes on the already taxed which is inequitable and (ii) raising indirect taxes which is regressive. Both approaches raise inequality, provide incentives for non-compliance and give rise to a fear of appropriation that further lowers the incentive to invest. Instead, the government should focus on (i) improving the capacity and incentives of tax collection agencies to broaden the tax net without raising rates on the already taxed, (ii) simplifying the tax code thereby removing incentives to misreport income and (iii) leveraging recent gains in information technology to enact systems that make it costlier to evade taxes. Furthermore, it is worth remembering that austerity negatively affects growth. Long-term gains in growth can only be made through increasing the inherent productivity of Pakistani exports through (i) investments in know-how and human capital and (ii) ending state collusion in making real estate a more profitable investment than productive investments. In recent years, Pakistani exports in real terms have declined. The recent currency devaluation will only help exports and ultimately growth if this opportunity is used to diversify our export portfolio towards more complex products. Finally, the other approach adopted by the government — that of obtaining short-term liquidity –will help but not for long. The government must abandon the oft-used strategy of import-led growth and not take on debt for infrastructure investments. We will also do well to make the conditions of our current debt transparent. Chinese debt shrouded in secrecy will only impede attempts to plan ahead, and will lead to more fiscal instability. The writer is a PhD Candidate in Public Policy at Harvard University.

Pakistan scores poorly on a range of human development and inequality measures. Our HDI score of 0.562 is ranked 150th in the world, and is just below the regional average of 0.59. Similarly, a Gini coefficient of 0.37 shows that socio-economic inequality remains widely prevalent. Recent work by Abid Burki and his colleagues at LUMS shows that a child born to a household in the lowest income quintile will only have a 20 per cent chance of moving up one income quintile in his or her own lifetime. Our existing track record on a number of welfare, mobility, and inequality related indicators show Pakistan to suffer from a particularly persistent case of elite-biased economic growth with little accompanying benefits for the poor. In 2019, headlines continue to be dominated by a slowing economy, fiscal shortages, and the ill health of macroeconomic fundamentals. While these are important issues that need to be addressed for sustainable growth, a rapidly urbanising country with a large youth population such as ours needs to place concurrent attention on making growth equitable and accessible to a larger segment of the population. In my view, the biggest inequality concern in the future is going to be the availability of dignified employment for the vast numbers of young people migrating to cities in search of a better life. UNDP’s recent NHDR on Youth in Pakistan highlights jobs and economic stability as a primary concern for young people. Stable employment in the formal sector, along with adequate social protections, have time and again proven to be the bedrock of social mobility. The absence of both potentially carries disastrous consequences for the country, and the region, with disaffected populations providing a fertile source of political instability. The writer is an Assistant Professor in Politics at LUMS.

Pakistan’s main external security threats have been land-based, but at least three drivers of change necessitate greater attention to maritime security and the balance of power in the Indian Ocean region (IOR). One, the IOR is emerging as a major theater, and perhaps the center of gravity, in this new era of great power competition. China and the United States are the main actors in this increasingly competitive environment, but countries like Australia, France, India, Indonesia, and Japan are also pivotal actors. Broader systemic dynamics in the IOR will shape Pakistan’s relations with great powers and regional states, given that Pakistan is China’s primary ally and often the first foreign procurer of its advanced military hardware. As a US-China bipolar or multipolar strategic environment develops in the IOR, Pakistan should maintain awareness of the push and pull factors that may situate Pakistan within a particular bloc, and be cognizant of the costs and benefits of any sort of alignment. Additionally, South Asia—the region to which Pakistan belongs—may be subsumed to some degree within the larger IOR as India moves away from the South Asian Association for Regional Cooperation and the Trump administration pushes forward with an Indo-Pacific strategy. Pakistan has had policies toward South Asia, but it has not developed an IOR policy. One may now be necessary. As the region’s second-most powerful military, Pakistan has often served as a balancer to India within South Asia. But, as the elections and power struggles in Bangladesh, the Maldives, and Sri Lanka in 2018 have shown, littoral South Asian states are now being pulled into IOR dynamics due to America’s Indo-Pacific strategy and China’s growing regional influence. Two additional geoeconomic factors should drive a more coherent Pakistani perspective on the IOR: the China-Pakistan Economic Corridor (CPEC) and Pakistan’s energy supplies. While CPEC and the Gwadar port project are primarily economic, they add to the maritime security burden of the Pakistan Navy and have potential strategic implications. Pakistan’s growing dependence on imported hydrocarbons and the potential for significant recoverable offshore energy reserves (including in its extended economic zone) have similar non-economic implications. Pakistan must carefully navigate these unchartered waters. The IOR is a vast space where economic, political, and strategic dynamics blur. As a result, it requires Pakistan to develop a multidimensional policy informed by areas, such as geo-economics, that it has traditionally neglected. The writer is a Non-Resident Fellow, Middle East Institute.

For Pakistan in 2019, the “energy crisis” is real: power shortages, an over-dependence on natural gas resources (current shortfall estimated at 2 billion cubic feet/day, and growing), policy miscalculations, and poor management have all been hallmarks. However, there has also been a steady increase in energy supply in recent years: investment in LNG infrastructure, the growth of renewable energy, and of course, the impact of CPEC (with an expected USD 33 billion dedicated to energy projects, on an IPP-model) all bode well for the future of energy in Pakistan, and it is expected to remain a top policy priority. Barring the impact of major political events, oil prices are expected to be lower in 2019 owing to a supply glut and slower demand. As a heavy oil importer, Pakistan may be able to play this to its advantage with savings for the national exchequer. Our long-term energy security, though, is not just a question of national policy – it is also an arena for geopolitics. American sanctions and external pressure continue to jeopardise the Iran-Pakistan (IP) gas pipeline. The US-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) project, conversely, tests regional politics and trust in South Asia. Costly LNG imports from Qatar, though currently on track, are mired in controversy due to questions on the long-term contract’s transparency. Since both of Pakistan’s pipeline agreements, and its LNG contract are linked to global oil prices, political will to invest in pipeline infrastructure will continue to be weak if the comparative cost-advantage for piped gas is not higher than existing LNG for the government. Pakistan is also estimated to have 105 trillion cubic feet of technically recoverable shale gas, the exploitation of which may bring import projects under question in the next decade, particularly if China is able to surpass its own shale gas challenges in the Sichuan basin. Ultimately, Pakistan’s energy appetite cannot merely be satiated by energy supplies. At COP24, Pakistan reemphasised its commitment to its climate goals, and so decarbonisation will have to feature prominently in energy policy. Energy efficiency, especially through efficient technology, and conservation will have to take top priority in policy corridors. With our national energy policy documents expected at the advent of the New Year, it is worth thinking about the steps we should take to ensure that planning and implementation dovetail efficiently and responsibly. The writer is an International Public Policy specialist and teaches at ITU.

There is no water crisis in Pakistan. The water crisis in Pakistan is a lot worse than people think. Both statements are true. There is no water crisis of the type that the government, WAPDA, Supreme Court, or the media talk about. Pakistan cannot, and will not run out of water. There is no physical process, even under climate change, because of which Pakistan can run out of water. The same amount of water that we have had for millions of years will be there for millions more. Anyone who tells you that Pakistan will run out of water doesn’t know first thing about hydrology, geomorphology, glaciology, or, in short, water. Sadly, thanks to our education system very few people know anything about water. We know a lot about concrete and bricks — hence our dam fetish — but not about water. That said, Pakistan’s water crisis is a lot worse than people think. There are people dying in Karachi today, from dehydration and contaminated water, a few hundred meters from DHA and Sindh Club’s swimming pools. More than 95 per cent of the water in Pakistan is devoted to agriculture. Industry accounts for no more than 2 per cent of our national water usage. Over 200 million Pakistanis make use of less than 3 per cent of Pakistan’s water supply. Pakistan is also the largest exporter of virtual water in the world — through rice, sugarcane and cotton. Is there a solution to this dire crisis? Yes, and it lies in water storage. We are blessed with huge water groundwater storage in the Indus aquifer. But because of more than 600,000 tube-wells in Punjab, we are mining that resource. If we want to save water for present and future generations, we must simply: collect electricity bills from the agricultural sector. No farmer in the world can afford to pay the full pumping price of water and indulge in wasteful crop production like our large farmers do. Collect the electricity bill and you won’t have a water crisis. If we focus on our domestic water supply, we can keep children from dying of renal failure. By bringing women into the water sector, our priorities will be different from those of the many male civil engineers who run the water sector now. Dams are irrelevant to Pakistan’s water crisis. The writer is a reader in Politics and Environment, Department of Geography, King’s College London.

Our security and stability continues to be conjoined to the convulsions of an 18 year-old war in Afghanistan. The outcome of that war, in turn, is being decided in every capital other than the one that matters – Kabul. Pakistan’s insistence on an Afghan led and owned endgame has never been without prejudice to the belief that military operations in Afghanistan should be better managed, and more responsibly handled by its American planners. The US, meanwhile, has moved from one pole – that of burdening Islamabad with the single-state responsibility of stabilizing its neighbor – to another, of frantic shuttle diplomacy, while jettisoning the roles of crucial regional actors: China, Russia and Iran. On the ground, the Taliban still has tremendous firepower and the capacity to capture districts and paralyse Kabul. Compounding the uncertainty of a viable political settlement is the fact that the drawdown of half of all 14,000 American troops in Afghanistan, as suggested by senior sources in the Trump administration, will trigger panic of the sort that could lead to a number of costly miscalculations with implications for Pak-Afghan and Pak-US relations. For Islamabad, a precipitous pullout will also mean a fresh influx of refugees to the already 1.4 million undocumented Afghans living in the country. Last year, Pakistan passed arguably its most notable legislation of the year in the FATA reforms bill. Given the administrative complexity of the tribal merger with Khyber-Pakhtunkhwa, a sudden expansion of an Afghan insurgency will almost certainly imperil efforts to stabilize Pakistan’s western geography, and lead to a more difficult conversation with whoever emerges victorious from Kabul’s Presidential election in July. Achieving some modicum of an agreement with the Taliban prior to the election will be necessary for the legitimacy, autonomy and efficacy of Afghanistan’s next government. For Pakistan’s ties with Washington and Kabul to stay on a stable, if not friendly, trajectory, meanwhile, will mean reconciling to the idea that a peaceful transition in Afghanistan is only possible with full regional buy-in, provided Kabul can commit to building up internal solvency and not allow itself to be excluded from the room while America is talking to the insurgents. The writer works for the Jinnah Institute.

In 2019, policymakers must contend with Pakistan’s deepening demographic dividend, and both its potentials and its pitfalls. Pakistanis under the age of 29 are estimated to make up a sizeable two-thirds of our growing population. But with large numbers are also born a multitude of demands of the state. Where does Pakistan stand in providing for its youth? What position does this group occupy in the state’s imagination? Statistics tell a complicated story: that of a 70 per cent literacy rate (i.e. the ability to read the newspaper and write a single letter in any language). Only 6 per cent of Pakistan’s youth will receive more than 12 years of education in his or her lifetime. Employment levels in Pakistan are lower than they are in other comparative contexts in South Asia. Today, less than 40 per cent of Pakistan’s young are employed, out of which only 7 per cent are women. Unless our policymakers start making serious and practical accommodations for the country’s youth, expect to see increased poverty, dependence and pressures on limited state support systems. Economists forecast Pakistan has till 2045 before its youth becomes a liability. Large youth cohorts have historically allowed countries to experience immense economic growth: South Korea experienced its youth dividend in a twelvefold GDP per capita growth after 1970, and managed to keep youth unemployment below ten per cent. One can expect Pakistan to undergo the same changes if it makes wise and tangible investments in youth health and education. As a long-term intervention, the curriculum must be changed from one that rewards rote learning to one that is geared towards skills development, and problem solving. Similarly necessary is the acceleration of polio eradication to improve Pakistan’s development indicators. Finally, we must all remind ourselves of the truism that grievances left to fester due to poverty or political disenfranchisement carry the potential to translate into a breakdown of social order and instigate violence. Thus, the stakes of increasing literacy rates, providing social safety nets that include healthcare, and gainful employment are high. If not in the coming year, then definitely in the coming decade. The writer works for the Jinnah Institute.

2019 will be a critical test for whether the new PTI government led by Prime Minister Imran Khan can sustain his censure of rightwing hardliners, and articulate his vision for Pakistan as different from theirs, a task the previous government was unable to do. Pakistan’s main extremist challenge in 2019 and beyond is no longer a violent insurgency waged by the Tehreek-e-Taliban Pakistan, as it was a few years ago. Indeed, Pakistan’s new extremists are hardliners who do not (yet) engage in mass-casualty terrorist attacks, but in massive, disruptive protests over the issue of blasphemy. Over the last few years, they have been emboldened by the state’s lack of enforcement against them and the failure to publicly provide a credible counter-narrative. In 2018, they contested the country’s general election without impediment. Only when they threatened to disrupt the newly elected government did the new administration take a stance. Stemming the growth of extremist elements will not be easy, given that Barelvi organizers and their leaders are the most organically grown of Pakistan’s extremists, and find easy support in a population indoctrinated in Zia’s laws and curricula. The fight against these extremists, more than any other, will define whether Pakistan changes course for the better. The writer is a Visiting Fellow at the Brookings Institution in Washington, DC.

Borders are said to be the scars of history. But in Pakistan’s case, there is a case to be made that these are in fact wounds that never healed. In 2019, Pakistan will continue to contend with an unpredictable Afghanistan to its West and a hostile India to its East. Our political history, past and recent, has been shaped by the pathologies and tensions of these borders. But the future does not have to be inevitable. Unless we, together with our neighbours, stop viewing these borders as immutable wounds, history will not change. Indeed, 2018 provided some hope as Pakistan worked to strengthen its borders. We did so by building a fence to the West and reaching out across to the neighbour on the East by opening the Kartarpur Corridor. The truism that strong borders make good neighbours has different connotations to our east and to our west. With India, strength means having enough self-confidence to allow more movement across the border, as well as the Line of Control, of people as well as goods. The past year has seen the highest number of casualties in Indian held Kashmir and the Line of Control since a decade. Finding a path to dialogue rather than oppression will determine the levels of violence in the disputed region. The human touch heals like nothing else, while trade can and will build constituencies for peace. Peace rarely comes to those who continue to remain hostage to insecurities and fears. To the West, Pakistan has to work hard to shed the baggage of the past, and fence to control unchecked militant traffic. A strong border, means having the confidence to believe that Afghanistan can control its own destiny. To this end, Pakistan should do all it can to facilitate talks and then stand back as Afghans themselves figure the rest out. The wounds in Afghanistan will heal only if Pakistan and the US both change history, rather than repeat it. The writer is a journalist.